business essay

The currently flourishing Indian Insurance Industry

Published: 23, March 2015

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The Indian Insurance industry is a flourishing one which has several national and international players who compete for excellence. With several reforms and policy regulations, the Indian insurance sector has witnessed tremendous growth in the recent past.

India having around 17% of the world's population is a largely untapped market. Nearly 80% of the Indian population being without a life, health and non - life insurance, a growing number of insurance companies are now emerging in the Indian insurance sector. With the opening up of the economy, several international leaders in the insurance sector are trying to venture into the India insurance industry.

The growth in the insurance industry directly impacts the reinsurance industry. Reinsurance providers are basically companies that provide insurance cover to insurance companies so as to cover their risk. With the growth in the amount of insurance products sold by the insurance companies their risk component goes on increasing. So as to cover this risk, companies resort to reinsurance. Thus the reinsurance market is all growing at a rapid pace.

The growth of the Reinsurance industry in India is coupled with a number of challenges. Challenges faced by the reinsurance industry include shrinking margins, increasing competition etc. In order to meet the challenges, reinsurance companies across the globe have begun leveraging heavily on their information and communication technologies.

General Insurance Corporation of India (GIC Re) is the sole reinsurance company in the domestic reinsurance market in India with more than three decades of experience in the Re-Insurance business. GIC is headquartered in Mumbai.

In India, GIC provide reinsurance to the direct insurance company as it is the sole reinsurer in the market of domestic reinsurance. It is one of the leaders in the facultative placements and domestic companies' treaty programmes.

OBJECTIVES FOR ENTERPRISE RESOURCE PLANNING SYSTEM

The key objectives for initiating ERP implementation were as follows:

So as to retain leadership position in the national (Indian) reinsurance market.

The intention of emerging as the leader of reinsurance in the Afro - Asian markets.

To obtain an integrated view of all business transactions.

MAJOR BUSINESS CHALLENGES FACED BY GIC RE

Customer-Centricity

The change in focus of the organization to being customer-centricity created a number of issues for the company.

It became important to have optimal knowledge of all the customer segments.

Customized products and services were required to designed to meet the needs of each of the identified customer segments.

It became important to adopt cross selling of products and services as an important growth strategy.

It also became important to provide any time and any place reachability to the customers.

Competition

The growing number of players in the market created an environment of intense competition

In order to sustain such levels of competition it became imperative for the company to adopt new strategies and identify means of securing a competitive advantage over its competitors.

Globalization

Expansion of company operations across multiple geographical locations also made it necessary for GIC Re to identify means of effective monitoring and control.

Expansion also increased the level of competition by adding new competitors from the new geographical locations.

Product Commoditization

The increase in competition was impacting the company's profit margins.

It became absolutely necessary for the company to distinguish its brand from competitors.

Improved reserving process (tracking the development of outstanding loss reserves).

FINANCIAL & STRATEGIC BENEFITS

SAP allowed visibility of all assets

Standardized evaluation of all assets were achieved

Daily updates to the investment portfolio enable the company to achieve integrated investment management

Effective real time risk analysis

TOTAL COST OF OWNERSHIP

95 % of the company's requirements were met by th standard solution offered by SAP and minimal customization was required

OPERATIONAL BENEFITS

The operation benefits as evaluated by the company after two years of implementation are as follows:

KEY PERFORMANCE INDICATORS (KPI)

IMPACT

Time to measure performance

-70%

Time to plan for new projects and activities

-30%

Time to performance market risk analysis

-80%

Efforts to map sources of risk

-80%

Reporting Flexibility

+90%

Quality of Reports

+80%

Quality of Portfolio evaluation

+90%

Quality of transaction mapping

+90%

FUTURE PLANS

Up gradation from SAP R/3 Version 4.7 to SAP ECC 6.0 platform

Connecting offices in Moscow, Malaysia and South Africa to the upgraded ERP network

General Insurance Corporation of India has derived significant benefits from implementation of SAP Reinsurance. From this case it is evident that SAP has the potential of being a measure source of improved efficiency and competitive advantage for insurance service providers.

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